Breaking the cycle of unpaid work

20th May, 2018

Unpaid internships favour those who can afford to take them and discriminate against those who can’t. They have been a feature of British business life for decades. Each year, thousands of university and school leavers are grateful for the opportunity. However, the reality is that unpaid ‘work’ – which includes many internships – has for a long time been illegal. The law states that all who work are entitled to the national minimum wage appropriate to their age bracket, and that they are in contravention of the law if they waive these wages. The definition of a ‘worker’ is fairly general but, in essence, if any individual has an arrangement, contractual or otherwise, to carry out work for the benefit of their employer, with set hours and defined responsibilities, then that individual is a ‘worker’ and must be paid at least their corresponding minimum wage.

So what’s the difference between a ‘worker’ and an intern?The answer is ‘not much’, if anything, in most cases.

There is no single legal definition for an intern or internship and no specific laws on their being paid. Rather, payment depends on whether or not the duties of a ‘worker’ are fulfilled.

The only exemptions are for students completing placements as part of their courses, and volunteers at charitable or voluntary organisations.

Many employers regard the role of interns as ‘work experience’ – as though the use of that term somehow obviates them from having to pay their interns a fair wage. In that case, the intern and the employer should consider whether a service is being fulfilled for the employer, as would be the case for a ‘worker’, or whether the intern is being mentored in a learning capacity. Only if the employer doesn’t control the intern’s work or derive immediate advantage from it, can it be deemed a training experience for the intern’s benefit. In this case it is likely to be legitimate that such interns are working for nothing – or, at best, with their travel expenses covered.

So why can so many industries and big employers still offer unpaid internships to those who would be considered as ‘workers’? Part of the answer is ‘because the authorities are not doing enough to enforce the law’.

The House of Lords has considered bills to ban unpaid internships. But these have been dismissed as “unnecessary”, mainly because the law already provides for intern ‘workers’ to earn the minimum wage.

HMRC is charged with handling the claims for wage arrears of those who believe they have been unjustly unpaid or underpaid. However the punishment for employers found to be in the wrong amounts to nothing more than the wages owed. For them it is a question of getting away with it unless they are challenged – which very few of them are.

For example, in October 2016, The Stage magazine found that graduates working in the arts world accumulated an average of nearly £7,000 worth of unpaid hours before securing full-time jobs. And the Institute for Public Policy Research estimated in January 2018 that one fifth of British internships were unpaid, which equated to approximately 70,000. Yet, it was reported on the Radio 4 show ‘Moneybox’ in the same month that HMRC was dealing with no more than a “low double-digit” number of claims. This indicates that the law is almost always unenforced.

By entering an agreement to ‘work’ for an employer the intern is legally obliged to take home at least the minimum wage. If they are not doing so, then they are illegally waiving their right to the minimum wage. So, both those who agree to ‘work’ without pay and those who employ them are breaking the law. Thus both parties can therefore be regarded as responsible for the reduced social mobility that this issue is known to cause.

Young ‘workers’ need to be aware that it is their legal requirement to earn at least the minimum wage; how can this be implemented in today’s world where interns often don’t feel they have any leverage?

“It takes two to tango”; both employers and ‘workers’ must be committed to the minimum wage for things to change. As long as either side is willing to disregard it, there will be plenty of ambitious young adults able and willing to gain advantage over their peers at whatever cost, and there will be employers seeking to profit from free manpower.

When it comes to enforcing the law on both ‘workers’ and employers, there are many difficulties, both moral and practical. The opportunities for employment for young people and for them to gain valuable experience would no doubt reduce in the event that the law was better enforced. As an example, the creative industries such as media, theatre or architecture are well known for advertising a large number of unpaid ‘experiences’ with the prospect of full time jobs well down the line.

In the majority of these cases, interns are carrying out genuine work and should be paid. But interns typically don’t question the arrangement for fear of upsetting the very person they are hoping to impress, and losing the opportunity to gain the specialist experience that they need for future employment.

On the flip side, singling out and criminalising young workers who are making honest attempts to get onto the job ladder for little or no wages would be very unpopular.

It is clear that heavy-handed sanctions stand little chance of making an impact or could even have an adverse effect. So, perhaps a better tactic would be education and encouragement – and to draw public attention and opprobrium towards those employers who are serial offenders?

To educate young adults about their right and duty to claim at least the minimum wage when they are entering into a ‘working’ agreement is important. This is likely to increase their confidence sufficiently for many to broach the subject during initial conversations with prospective employers. Helping people to understand what they should by law be paid will encourage many to settle for nothing less.

Such a change in attitudes could be expected to have an impact on employers who realise that the more astute, determined and valuable candidates will no longer be settling for the offer of four months “expenses-paid” work at their “competitive” firm, because at least some of their competitors will be offering the same experience – but paid. Businesses would realise that paying interns would give them access to a bigger pool of young talent including those who cannot afford to do unpaid work.

Recognising that employees are their most valuable assets and that a bad reputation for not rewarding them accordingly is not easily repaired should impel offending employers to do what is right both morally and legally. The ensuing improvement in business reputation; in attracting talented candidates in greater numbers; in increasing workers’ satisfaction, dedication and loyalty; and, in lower workforce turnover will, over time, more than repay the extra cost of providing fair wages.

Rufus Kleinwort (rkleinwort@googlemail.com) was paid to write this blog for Deverell Associates during his time as an intern.